The owners of an Edison telemarketing company that did fund raising for police and other non-profit organizations have agreed to pay $18.8 million in fines and permanently get out of the business to settle a lawsuit brought by the Federal Trade Commission.

The fine paid by Civic Development Group and its owners, Scott Pasch of Warren and David Keezer of Monmouth Beach, is the largest civil penalty ever awarded in an FTC case.

The government accused CDG of misleading consumers into believing that they were donating directly to various police, firefighters and veterans charities, when in fact nearly 90 cents out of every dollar contributed went into the company’s bank accounts.

Although Pasch and Keezer didn’t admit to any wrongdoing, each will pay the federal government about $6 million in penalties under the settlement agreement. The remainder of the fine will be paid by the company itself.

Exhibits attached to the settlement agreement offer some insight into the lavish lifestyle CDG’s principals have been living.

Among the holdings the owners have already sold off or will have to liquidate are Pasch’s $2 million home in Warren, Keezer’s $2 million home in Monmouth Beach, three Mercedes-Benzes, two Bentleys and paintings by Picasso and Van Gogh. Even a 14-karat-gold diamond engagement ring is listed among the items that may be up for sale.

Pasch, Keezer and CDG also are defendants in a similar lawsuit pending against them by the California Attorney General’s Office.

CDG was the largest of several telemarketers cited in an investigation by The Record last September into the practices used by telephone solicitors to raise money for police organizations. For several years the company was the principal fund-raiser for the New Jersey State Lodge of the Fraternal Order of Police in Trenton.

According to its 2007 tax return (the most recent the group had filed at that time), the police group raised $4.15 million from the public — of which $3.64 million went to CDG.

Late last year, the Fraternal Order of Police announced it was phasing out its public fund-raising efforts, and instead would rely solely on members’ dues to fund its activities.

“The FOP severed its ties with Civic Development Group in December,” spokesman Ernest Landante Jr. said Wednesday.

This week’s settlement closes a lawsuit in which the FTC accused the company of violating the terms of a 1998 consent order, as well as the FTC’s telemarketer regulations. In the 1998 settlement with the federal government, CDG denied having engaged in deceptive practices such as telling donors the phone solicitors worked directly for the charities, but agreed not to make use of them in the future.

The government said Wednesday that CDG tried to evade the earlier order’s requirements by calling itself a consulting firm and claiming that its telemarketers thus became contract employees of the non-profits. When they had potential donors on the phone, the commission alleged, CDG workers would say they were employees of the charity.

The government also alleged that the company’s callers would insist that 100 percent of any donation went directly to the charity, when in fact the money went to an account controlled by a company headed by Keezer’s mother.

This latest settlement bars the company and both men from ever engaging in the charitable fund-raising business; in addition, they are barred from the telemarketing industry, even for profit-making companies.

This is at least the sixth lawsuit filed by the federal or state governments against CDG since 1995 that resulted in the company agreeing to pay fines and to not engage in deceptive practices — including one brought by New Jersey, which received $125,000 to settle a lawsuit in 1999.

The $18.8 million will go to the federal treasury and not toward reimbursing donors, said FTC spokesman Robert Kaye. Because tens of thousands of people gave relatively small donations in response to CDG’s solicitations, Kaye said, “logistically it would be very, very difficult to reimburse them.”

Kaye added that the case was brought in civil court because “we are a civil enforcement authority. We don’t have criminal authority, although the FTC certainly works with criminal law-enforcement agencies. But I can’t speculate as to why criminal authorities would or would not bring a case in these circumstances.”

Among the other items the two men are giving up is $4.3 million Keezer has in nine bank accounts. He will also be selling his 2007 Cadillac Escalade, 2006 Bentley and a Sea Ray Sundancer cruiser boat.

In November, Pasch listed nearly 1,000 vintage bottles of wine with an auction house in White Plains, N.Y., including a Lafite Rothschild 1989 valued at as much as $4,400. He is also auctioning off 30 classic guitars, including three Gibson Les Paul Customs valued at a total of more than $200,000.

Pasch is also selling off paintings by Picasso and Van Gogh. A Jan. 30 letter from the owner of the Russeck Gallery in Palm Beach, Fla., to Pasch’s wife, Lisa, notes, “Sadly I am unable to get any real offers on your pieces,” which include a 1937 Picasso ink drawing titled “Minotaur.” “The only offers have been in the $300,000 to $400,000 range,” the letter adds.

E-mail: lipman@northjersey.com
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The owners of an Edison telemarketing company that did fund raising for police and other non-profit organizations have agreed to pay $18.8 million in fines and permanently get out of the business to settle a lawsuit brought by the Federal Trade Commission.

DOCUMENTS

In addition to agreeing to get out of the charity fund-raising business altogether, the owners of CDG Management will also cede property to the government to cover the nearly $20 million fine they’ve agreed to pay. The items range from real estate to jewelry, from cars and boats to wine collections and prized guitars:

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